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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






2. The marginal utility from consumption of more and more of that item falls over time






3. The difference between total revenue and total explicit and implicit costs






4. Demand for a resource like labor is derived from the demand for the goods produced by the resource






5. Ed < 1






6. The imbalance between limited productive resources and unlimited human wants






7. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






8. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






9. Ed = 0 - no response to price change






10. The difference between total revenue and total explicit costs






11. Exists at the point where the quantity supplied equals the quantity demanded






12. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






13. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






14. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






15. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






16. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






17. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






18. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






19. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






20. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






21. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






22. Exists if a producer can produce more of a good than all other producers






23. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






24. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






25. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






26. When firms focus their resources on production of goods for which they have comparative advantage






27. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






28. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






29. Two goods are consumer substitutes if they provide essentially the same utility to consumers






30. The additional benefit received from the consumption of the next unit of a good or service






31. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






32. The output where ATC is minimized and economic profit is zero






33. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






34. A firm that has market power in the factor market (a wage-setter)






35. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






36. The sum of consumer surplus and producer surplus






37. The ability to set the price above the perfectly competitive level






38. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






39. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






40. MUx / Px = MUy/Py or MUx/MUy = Px/Py






41. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






42. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






43. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






44. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






45. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






46. Ed = 1






47. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






48. Product demand - productivity - prices of other resources - and complementary resources






49. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






50. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.